New Relocation Assistance Program For Homeowners
Monday, November 9, 2009
GLORIA PENNER (HOST): California has one of the highest foreclosure rates in the country. It is estimated that more than 13 percent of American homeowners have fallen behind on their payments or are in foreclosure. But there is a program that may ease the stress of homeowners and tenants. KPBS reporter Sharon Heilbrunn has the story.
SHARON HEILBRUNN (KPBS Reporter): If you are facing foreclosure, you could get money in your pockets for leaving your house in good condition. Enough, even to pay the first month's rent when you move. The program is called Cash for Keys. Essentially, it's a relocation assistance program. Backed by the Federal Housing Association, it allows banks to give money to tenants if they leave their house in good condition and they move out quickly.
ERIC WEICHELT(President, San Diego Association of Realtors): In effort, it's a process that allows the bank to A, get the property back quicker, without the attorney fees involved in eviction. But also gives the previous tenant, it gives them an opportunity to go out a find a new property and still have some funds in order to afford for that deposit.
HEILBRUNN: Tenants have to leave their house in what is called "broom-swept" condition. Meaning, all the appliances and fixtures are still intact and the house is relatively damage-free.
WEICHELT: Well, it's an unfortunate by-product of the market, that sometimes if they don't get the relocation assistance, they'll be a little less careful when they move out. Or, they'll have a little bit sense of anger about the whole process, which is understandable. They can cause damaged to the property, we think that the bank is trying to avoid. I've walked into properties that the whole house is flooded. We've walked in and the windows have been taken out. We've had circumstances where if there's custom doors, that all the custom doors have been removed and you can't just go get those at Home Depot.
HEILBRUNN: The compensation amounts are based on the bank's discretion and the neighborhood the tenant lives in.
WEICHELT: Now the longer you want to stay, the less money the bank is going to be, in essence, able to give you. But the sooner you can relocate the better. I have some who given up to $7,500.
HEILBRUNN: Using Cash for Keys also means the tenants won't have an eviction notice on their record. Erice Weichelt says that on average, 10 tenants a month take advantage of the program at his realty firm. This program may be what weary tenants and homeowners need in the coming months. The Mortgage Banker's Association recently said that it expected U.S. home foreclosures to rise before leveling off late next year.
WEICHELT: I think it's a great alternative to the martial lock-out, that's for sure. We've seen the benefit in this industry for a long time, in several different cycles in two states. And I could tell you that we see it ended up being a real positive experience. Gives them a chance to get a fresh start, whether they are the previous mortgager or tenant.
HEILBRUNN: Now realtors say the popularity for Cash for Keys is growing as more and more banks are starting to see the value of the program. We want to know what you think about this. Log onto KPBS.org/sdweek and leave us a comment. For KPBS, I'm Sharon Heilbrunn.
PENNER: Yesterday, Fannie Mae announced another option for homeowners facing foreclosures. It's called Deed for a Lease and would allow some of those homeowners to stay put while paying rent if they deed their property back to Fannie Mae and meet other conditions of the program.
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